LGA says local areas will run out of regional aid funding in 18 months

LGA says that local areas in England are at risk of losing out on £5.3bn in just 18 monthsImage: LGA says that local areas in England are at risk of losing out on £5.3bn in just 18 months. Photo: courtesy of Local Government Association.

The Local Government Association (LGA) has warned that local areas in England could lose out on £5.3bn in just 18 months if the government isn’t quick in replacing funding arrangements post-Brexit.

The association, which represents councils in England and Wales, is urging the government to work with local areas to establish a firm plan as an alternative to the European Structural and Investment Fund (ESIF) 2014-2020 programme, which is set to end in December 2020.

Currently, ESIF is designated to local areas to generate jobs, support small and medium businesses, provide skills training, develop rural economies, invest in digital infrastructure and critical transport, apart from increasing inclusive growth throughout the country.

LGA said that although the combination of EU rules governing ESIF with Whitehall’s management of it has led to a complex funding process, the investment acts as match funding to get important local projects off the ground.

The association claimed that ESIF funding has become a lifeline for local areas to make investments that can impact people and communities amid drastic reductions in national funding.

LGA also said that the government is yet to consult on the design of UK Shared Prosperity Fund (UKSPF), the domestic replacement of ESIF funding, which it had committed to in July 2018.

According to the association, the UKSPF should play the role of a springboard for further devolution and align other growth funds to enable locally determined programmes that achieve the results that would matter to local communities.

LGA Brexit taskforce chairman Kevin Bentley said: “The clock is ticking for the Government to set out a firm plan to replace this funding into the next decade and beyond.

“Brexit cannot leave local areas facing huge financial uncertainty as a result of lost regional aid funding. This funding has been used by local areas to create jobs, support small and medium enterprises, deliver skills training, and invest in critical transport and digital infrastructure and boost inclusive growth across the country.

“With 18 months until funding runs out, the Government needs to work urgently with councils to develop a fully-funded and locally-driven successor scheme.”